The instrument used by Federal Reserve to smooth the money supply and interest rates include ____________?
Correct answer: B. repurchase agreements
- A. treasury notes
- B. repurchase agreements
- C. commercial payable notes
- D. commercial receivable notes
Explanation
The Federal Reserve uses repurchase agreements to influence short-term liquidity, money supply, and interest rates by temporarily buying or selling securities. Commercial payable and receivable notes are not standard monetary-policy instruments.
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